CARMEL, N.Y.—Supporters of a plan to have Putnam County share sales tax revenue with its towns and villages may be running out of time as the state legislature prepares to go into recess next month.
It all began last month when the County Legislature passed a measure to lower the sales tax rate from 4 percent to 3.75 percent; County Executive Kevin Byrne vetoed the legislation and instead teamed with the county’s six supervisors and three mayors for a plan that would keep the sales tax where it is and then share some of that revenue with the municipalities.
Byrne estimates that cutting the sales tax by .25 percent, as the legislature proposes, will cost the county roughly $5.3 million in annual revenue. Byrne’s plan would keep the tax rate at 4 percent and then share a little more than $2 million of the $85 million the county typically collects annually. Each municipality’s share would be based on its population. Carmel, the largest town in the county, could receive as much as $900,000 in sales tax revenue if the plan is approved by the legislature, according to Carmel Supervisor Mike Cazzari.
Local state representatives have already crafted a bill that would implement Byrne’s revenue-sharing plan, but the County Legislature must endorse that bill before Albany can act on it. If it doesn’t get to Albany in time, the sales tax rate will automatically drop to the default amount of 3 percent, which would cost the county even more money.
The Legislature is expected to vote on whether to send that endorsement to Albany on Monday night (May 19). Byrne said he has no idea which way they will vote. A follow-up story will be posted to News.HalstonMedia.com after the meeting.
If the Legislature fails to approve it, the tax rate would plummet from 4 percent to 3 percent. Byrne said the county would have to make up that lost revenue somewhere, most likely by increasing the property tax rate—something he adamantly opposes.
Byrne said he worked with local municipal leaders to craft his revenue-sharing plan—something the local governments have sought for years.
The Carmel Town Board passed a resolution at its May 7 meeting that once again urged the County Legislature to adopt the sales tax revenue-sharing plan.
“The town of Carmel shall take whatever action necessary to support and effectuate the county executive’s proposed sales tax sharing at one-ninth of 1 percent, to be allocated to the towns/villages according to population with every town and village to receive a minimum of $50,000,” the resolution reads in part. “The town of Carmel shall take whatever action necessary to support the county extending the 1 percent sales tax rate, and be it further resolved that the town of Carmel urges the Putnam County Legislature to call a special meeting to consider and adopt the resolutions proposed by the county executive in conjunction with the towns and villages of Putnam County.”
The shared funds must be used for public projects such as local infrastructure and capital needs, not for payroll or general operating expenses. If sales tax revenue remains consistent with last year, Byrne said the total shared amount would be approximately $2.44 million.
With state lawmakers close to heading home for the summer, Byrne said the County Legislature needs to act quickly.
“Now that we are at the point where we are several weeks away from when the State Legislature recesses, it might get on the calendar but there are no guarantees they will actually pass it. You are racing against the clock,” Byrne told the Town Board at the May 7 meeting. “If the State Legislature doesn’t pass legislation to extend the current rate, the rate defaults to 3 percent.”
Byrne said that sharing the tax revenue with the towns is a “historic opportunity.”
“The arguments for sales tax and revenue sharing are much stronger than they were 20 years ago,” he said at the Town Board meeting. “Our county sales tax rate is competitive with a vast majority of counties across New York State. You guys are bearing the cost of economic development, and I believe you should receive a modest share of that sales tax revenue.”
Byrne said that if they miss the state deadline and Putnam’s sales tax rate drops from 4 percent to the state’s default 3 percent rate, the county will sacrifice 25 percent of all the tax revenue it would receive—which equates to more than $20 million.
“That would be a very big problem for all of us,” he said. “Every single town and village in this county has unanimously passed a resolution supporting this. There was not a single dissenting vote.”
Cazzari said receiving the sales tax money would provide Carmel with a much-needed windfall.
“This money could be anywhere from $500,000 to $900,000 and if you look at all the bills we have, the water infrastructure, the sewer, the sidewalks that we need are all important,” he said. “There are mandates from the state but there is no funding.
“I don’t think that ever before both Democrats and Republicans and all the villages and all the towns have agreed together,” he continued. “At least not since there was a Board of Supervisors, which is maybe what we need and not a legislature because they don’t serve the people.”
Councilman Robert Kearns said he’s been pushing for a tax-sharing program since winning a seat on the Town Board.
“This is something I’ve been speaking about for my entire term and the reason I feel so strongly about it is because the town of Carmel, the largest town in Putnam County, generates a significant amount of sales tax for the county,” he said. “It is because of the work of the town of Carmel… we should be getting a portion of that sales tax revenue. It shouldn’t be a blank check where we do whatever we want with it; it should go toward infrastructure because infrastructure improvements will generate even more sales tax revenue for the county. That is what we are here to do. The check should go directly to our highway department so they can pave the roads. There is a lot that can be done with that money. This is something long overdue.”
But County Legislator Paul Jonke (Southeast) pushed back, calling Byrne’s administration “bizarre.”
“The Legislature passed a sales tax reduction bill that lowered the sales tax by a quarter of a percent with a 5-4 vote. This was vetoed by County Executive Byrne,” he wrote in a letter to Mahopac News. “Byrne then held a press conference with a sign on the podium that read ‘TAX RELIEF—WHERE IT MATTERS.’ Only in this bizarre administration can vetoing a sales tax cut be called tax relief. No one has been able to explain that one to me.”
Jonke wrote that Byrne has shown no interest in the past in sales tax sharing.
“It puzzles me that the county executive has a newfound interest in sharing sales tax with the towns and villages,” he stated. “There was no mention of it in last year’s disastrous budget process. There was no mention of it in the recent State of the County address. At the start of the sales tax extension process he indicated that there was a dire need to collect the entire 1 percent. Now he’s rounded up the supervisors and mayors to play a political game with taxpayers' money. They have held meetings with state and local officials and not invited a key player in the decision-making process—the legislative chairwoman (Amy Sayegh). Why the secrecy?”
Jonke called an online survey Byrne conducted with taxpayers to determine how tax money should be spent “useless.”
“This statistically useless poll is the equivalent to an Albany push poll that directs the result in a desired direction,” he wrote. “This trick is something familiar to career politicians like Byrne. I have serious concerns about this type of manipulation. If the county executive is capable of this chicanery and trickery, then what is next? What future issues will he try to manipulate? This is a betrayal of public trust.”
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